Oil climbed from the lowest closing price in four years on signs that production from the US may contract in the months ahead. West Texas Intermediate advanced 3.4% to settle above $59 a barrel after tumbling more than 9% during the past six sessions. Diamondback Energy Inc., the largest independent producer in the Permian Basin, trimmed its full-year production forecast and said it expects US shale production will drop in the coming months. Declining US crude output would help ease the global oversupply that’s expected to form this year as OPEC and its allies bring back production at a faster-than-expected pace. Diamondback projects onshore oil rigs across the US industry will drop by almost 10% by the end of this quarter, and Chief Executive Officer Travis Stice wrote that American output is “at a tipping point.” Meanwhile, the US cut its forecast for domestic oil production this year in a report developed prior to a weekend supply decision from OPEC and its allies, signaling that the pullback in expectations for American output is set to continue. Oil has plunged this year as OPEC+ boosts supplies and US President Donald Trump’s trade war weighs on the outlook for demand. The cartel agreed over the weekend to a further supply boost starting in June, with Saudi Arabia warning of additional increases if overproducing members don’t fall in line. “Given that Saudi Arabia’s preferred oil price range is near $90, its tolerance for prices around the $50 mark appears to be reaching its limit,” said Razan Hilal, a market analyst at Forex.com. “However, regaining market share through supply cut unwinds — particularly against non-OPEC producers — could help offset those losses.” Trump said he was willing to lower tariffs on China at some point because the levies are so high that the two

European natural gas jumped as traders assessed a range of bullish drivers — from a sharp rebound in oil prices to the region’s plans for a gradual phase-out of Russian supplies.  Benchmark futures rose as much as 6.7% after a retreat in the previous session.  The European Commission unveiled a roadmap to switch off the remaining flows of Russian energy. Details will come next month, but Tuesday’s publication showed a phased approach. The plan envisages a ban on all new contracts and halt to existing deals on the spot market — a third of Russian gas flows to the bloc — by the end of 2025. Long-term contracts will be phased out by the end of 2027. While the commission said its measures to terminate contracts won’t be sanctions, concerns about the future of those flows are adding volatility to an already nervous market.  Seasonal maintenance in Europe’s top supplier Norway is cutting pipeline flows to key consumers, while US data signal lower fuel flows to some export facilities. That’s in addition to a cold spell forecast in parts of Europe for the next two weeks, which could cause some heating demand, especially in the east. Europe’s gas prices lost more than 20% in April, when the US-led trade war started to weigh on the global economic outlook and prospects for energy demand. The drop has made it less challenging for Europe to replenish its heavily depleted fuel stockpiles, but it also spurred opportunistic buying in other regions, with some Chinese importers resuming deals on the spot market after months of relative inactivity. Hopes for trade talks between China and the US are also growing after Treasury Secretary Scott Bessent said Washington could see “substantial progress in the coming weeks.”  “The European gas market remains challenging for all market players due to geopolitical tensions and unclear

Russia is considering changing its key budget-building mechanism in response to sliding oil revenue, in a sign the Kremlin expects crude prices will remain lower for longer while the war in Ukraine continues to drain state coffers. The government may reduce the threshold of its so-called budget rule to around $50 per barrel from $60 currently from next year if crude prices remain low, according to a person familiar with the matter, asking not to be identified because the considerations aren’t public. Discussions are at an early stage and a key challenge for officials is that it would require cuts in state spending while the war continues absorbing resources, according to that person. Russia has long used the budget rule as a kind of insurance against falling oil prices. That mechanism allows the state to transfer surplus energy revenue to its National Wellbeing Fund when Russian crude costs more than $60 per barrel. The accumulated reserves then help compensate for when oil prices are lower. A Russian Finance Ministry spokesman didn’t respond to a request for comment. Crude has slumped to around a four-year low on expectations that US President Donald Trump’s trade war will hurt demand, and as the OPEC+ alliance led by Saudi Arabia and Russia abandons its longstanding strategy of supporting oil prices. Russia depends on revenue from oil and gas sales for 30% of the state’s income. The debate about lowering the threshold under the budget rule indicates the government is increasingly certain that the slump in global oil prices will continue and that it can’t expect a significant rebound any time soon. That would force the Kremlin to find other ways of replenishing its war chest amid record levels of spending on the military. The wellbeing fund has already been heavily depleted due to the

In this week’s Charging Forward, Drax will not bid its Cruachan II pumped storage hydro project into the UK government’s long duration energy storage scheme. Elsewhere, renewable energy developer Elmya has launched plans for a battery energy storage system (BESS) project at the Kelburn Estate in North Ayrshire. This week’s energy storage headlines: Drax pulls Cruachan II bid from LDES cap and floor Elmya launches 400 MW Kelburn Estate BESS Reform warns off battery storage developers after local election wins Grenergy Renewables 20 MW Peak District BESS approved Macquarie takes over UK solar and BESS developer Island Green Power Scottish government approves Ladyfield Renewable Energy Park Gresham House approved for 300 MW Mossmorran BESS Masdar Arlington Energy 100 MW Upton Lane BESS approved International energy storage news: Australian startup MGA Thermal claims “world’s first industrial steam heat energy storage demonstrator” Drax pulls Cruachan II cap and floor bid UK power generation firm Drax Group has said it will not enter its £500 million Cruachan II pumped storage hydro project into a government support scheme. The UK government launched the long duration energy storage (LDES) cap and floor scheme in 2024, aiming to accelerate the development of LDES projects. The scheme is targeted at LDES technologies including pumped hydro, liquid air energy storage, compressed air energy storage and flow batteries. A boy and his dog view Cruachan hydro electric power station in Argyll. But Drax said due to a “significant rise in the capital costs” associated with its Cruachan II expansion in Scotland, the company will not enter the cap and floor. ‘The projected cost of Cruachan II has risen over the past two years, whilst at the same time, the recoverability of all capital invested in the project remains unclear,” the company said in a trading update. “Therefore, Drax will not participate

Why is the oil price rising today? That was the question Rigzone asked Tamas Varga, an analyst at PVM Oil Associates, and Rebecca Babin, a senior equity trader for CIBC Private Wealth in New York. Responding to the query, Varga told Rigzone, “after Houthi rebels launched an attack on Israel’s Ben-Gurion airport, Israeli planes struck Houthi targets in Yemen leading to a jump in geopolitical risk premium, hence the rally”. In a video posted on the Associated Press website on May 5, Yahya Saree, who the video describes as the “Houthi military spokesman”, states, “the Yemeni Armed Forces announce that they will work to impose a comprehensive aerial blockade on the Israeli enemy by repeatedly targeting airports, foremost among them Lod airport, named by Israel as Ben-Gurion airport”. The video included subtitles. Saree describes himself on his X page as the “spokesperson of the Yemeni Armed Forces”. In a statement posted on its X page on May 6, Israel Defense Forces (IDF) said IDF fighter jets “struck and dismantled” Houthi infrastructure at the “main airport in Sana’a”. The IDF added in the statement that “several central power plants were struck in, and surrounding, the Sana’a area”. A statement posted on the IDF’s X page on May 5 announced that IAF fighter jets struck Houthi targets along the Yemen coastline. In her response to Rigzone’s question, Babin said, “crude is up today largely because the market was very short heading into the OPEC meeting – not just on flat price, but particularly through put spreads”. “While the 400,000 barrel per day increase from OPEC was widely expected, some participants were positioning for a more aggressive signal – specifically, guidance toward a full unwind of the 2.2 million barrel per day cut by October, which didn’t materialize,” Babin added. “The relatively muted

Reform leader Nigel Farage has branded the debate around net zero as the “next Brexit” after his party stormed to unprecedented success in English local elections last week. Farage’s party seized control of ten local authorities, alongside defeating Labour in the Runcorn and Helsby Westminster by-election. Reform candidates also won two newly created mayoral positions in Greater Lincolnshire and Hull and East Yorkshire, where there are billions expected to be invested in clean energy schemes. Former Tory MP Dame Andrea Jenkyns becomes Greater Lincolnshire’s first mayor, while former boxer and Olympic gold medallist Luke Campbell won in Hull and East Yorkshire. The Greater Lincolnshire Combined County Authority (GLCCA) is host to the £2 billion Humber Zero project led by VPI and Phillips 66. North Sea operator Harbour Energy leading the £7bn Viking carbon capture and storage scheme (CCS) in the region. In addition to CCS and hydrogen investments, the offshore wind sector is also having a transformative effect in places like Hull and Grimsby. Reform takes aim at net zero ‘lunacy’ The victory for Reform in the northern regions, which comes amidst a growing political backlash against net zero policies, could pose significant challenges for the energy sector. In the wake of its electoral wins, Reform deputy leader Richard Tice said the party will use its newfound council powers to use “every lever” to block renewable energy projects including solar farms and electricity pylons. “Whether it’s planning blockages, whether it’s judicial reviews, whether it’s lawsuits, whether it’s health and safety notices, we will use every available legal measure to an extreme way in order to frustrate these people,” Tice said. Similarly, Farage told reporters that any council staff in Reform-controlled authorities who work in roles related to climate change should be looking for “alternative employment”. The Reform leader has made